The Stock Exchange – A Merciless Universe:

International finance

The stock exchange has become the symbol of the business world, when everything goes well on the markets; the economy is going well too, but in each crisis or escroquies, the stock market is accused of all names.

The movement recorded in the capital markets exceed the real needs of our economy, the stock market has become the realm of speculation, excess and is completely disconnected from the real world, so much so that the police of the stock exchange (Regulators) can not longer control this.

We found toady many formers of the finance as Jordan Belfort, Jerome Kerviel or Geraint Anderson denouncing the excesses of financial world. According to them, traders are abusing the system, and causing unemployment, suicides, violence, depression and destroy lives, they sell their soul to the devil for money. After each crisis, financial instistutions are not the only ones accused we have also the polemic of « bonuses » (premiums paid to traders), proportionals to the gains which encourage them to make the maximum profit and therefore to take the maximum risk.

According to Geraint Anderson (former Analyst at JP Morgan): “The operators in a trade room have many points in common. They are intelligent, selfish, ruthless, greedy, obsessed with money and with the instinct of competition ; « every day you want to do better than your neighbor in your desk, and you would do anything to achieve your goals ».

The best traders on the planet can expect to earn tens of millions of dollars per year, that represents 20 years of wages for an average European. This bonus prompts you to think only in a short-term view(12 months), if you lose, in the worst case you only risk getting fired but you will reimburse nothing, which leads you to the craziest bet.

Since 2009, banks are encouraged to calculate the performance of their traders on three years and spread their payment over time; but to keep their best people, most banks get around the law by doubling or tripling their fixed remuneration.

John Coats (former trader, researcher at the University of Cambridge) maid a study during the bubble of the internet; he said : « at that time the whole world was caught up in the internet bubble, traders manifasted symptoms of excess of confidence, they were delusionals, euphorics, and did not sleep; However, women were not taken into turmoil in the same way, they were much more skeptical and the issue of hormones and more precisely of testosterone (wich affects more men than women) was the main cause » To study the rate of change of this hormone they collect saliva samples twice per day at the beginning and at the end of the trading day; he then noted that testosterone increased in a very hard way when the trader earned more than the market, but also that the level of testosterone in the morning could predict how he would win in the afternoon; So that would mean that the level of testosterone affects the level of profit and loss and not the reverse.

In conclusion, if we had more women and older men, it would probably bring more stability on the markets, moreover, a reorganization of markets today, where there is too much freedom, would be very useful.

Mekki Achraf

Achraf MEKKI

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